N R Narayana Murthy, the chairman of the board and chief mentor of Infosys Technologies, won Entrepreneur of the Year Ernst & Young award in India in 2002.
In the following year he won the World Entrepreneur of the Year (WEOY) at Monte Carlo. Here is the abridged version of an interview that appears in a book celebrating 10 years of the awards journey in India.
What are some of the key tenets of success from your career and business life?
First of all, entrepreneurship is all about converting an idea into wealth, jobs, products and services. Therefore, if an idea has to succeed in the market, the business value of the idea must be expressible in a simple sentence, not a complex or a compound one.
In other words, it should do one or more of the following unambiguously: reduce cost; reduce cycle time; improve productivity; enhance customer base; and enhance customer comfort. Unless the idea is able to do any of these better than existing products and services do, it is unlikely to succeed.
Of course, once in a while, entrepreneurs come out with an idea that creates discontinuity in the marketplace like automobile, television or computers. But it does not happen very often. Most often, a new entrepreneur improves existing products and services incrementally.
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Second, the market must be ready for that idea. No matter how good the idea or the value proposition is, if the market does not perceive value, the idea will fail. There are many such cases. Therefore, the success of an idea depends on how well the value proposition of the idea is accepted by the market.
Third, you need a team of people with mutually exclusive but collectively exhaustive skills, expertise and experience. Many entrepreneurial ventures failed because they brought people with just similar skills — technologists, sales people or finance people together. These days, venture capitalists use the key-employee network to bring in additional expertise for an entrepreneur. It is ideal if an entrepreneur can put together such a team.
Fourth, you need an enduring value system because, in the initial stages, entrepreneurship is all about hard work, courage, deferred gratification and sacrifice. Otherwise, the group will not succeed. In fact, I have seen that the most crucial reason why most start-ups fail, other than the market acceptability, is the incompatible value system among the members of the initial start-up team.
Finally, of course, you need money. Fortunately, that is easier today than when we founded Infosys. Today, there is lot of venture money chasing good ideas.
If you look back at the history of Infosys, what do you think are the three big mistakes the company made over the years?
Infosys is an enlightened democracy. It is a place where we have lots of discussion and debate. We bring lots of data and facts to the table, argue our positions, and the best idea wins.
The good thing about an enlightened democracy, as Amartya Sen has pointed out, is that you avoid disasters. So by and large, we have not had any major disasters.
However, we have committed several not-so-significant mistakes. For example, during the initial period of Infosys, we were not as aggressive on growth as we could have been. We were the victims of the licence raj that existed in the country. We accepted that we would operate under those constraints. We did not, like we do today, go to the government asking for changes and reforms that benefit the industry.
Let me give you a second example. In 1994, we were waiting for an approval from the Reserve Bank of India to open an office abroad. Those days, it took quite some time to get the approval. Hence, we invested some of our free cash in the secondary market to get some returns in the meanwhile.
We lost some of our investment. What we did was nothing illegal but we were not competent to invest in the stock market. We went to the shareholders and explained to them that we had lost money in the stock market, that we were wrong, and that we would not repeat our mistake. It was not a significant sum of money but it taught us an important lesson that we have to stick to our area of expertise.
You wanted a third example. In October 2001, there was a big discussion in Infosys about recruiting an additional 1,500 software engineers. Every one of my senior colleagues was against such recruitment since the market did not look too good. But a colleague of mine and I argued for it, won the argument, and recruited 1,500 software engineers. The market tanked. But, the senior and the middle management took a pay cut and honored our commitments to the youngsters. That was a tough decision.
It has often been debated whether entrepreneurs are born or made. What's your own view of this?
I believe they are made. I come from a family of teachers. Teachers normally do not become entrepreneurs. I come from a family where a civil service job was the most sought after one. My family was not known for risk taking. However, when I grew up, I went into the entrepreneurial orbit. I decided to venture out because my wife, who was working as an engineer, agreed to support the family and encouraged me to follow my dream.
A key aspect of successful companies is the ability to groom leaders and 'intrapreneurs'. How is this done in Infosys?
You have to create an environment of openness to new ideas. Youngsters must be able to argue with and differ from senior people. You have to create a mindset of using data and facts to come to any conclusion. You also have to believe in and encourage meritocracy.
You have to create a good leadership programme to prepare youngsters to go after big dreams, raise the confidence, hope, energy and enthusiasm of their team, and be courageous to fail. The organization must create a mechanism for senior people to mentor youngsters. Finally, you have to create incentives for people to succeed by way of better emoluments and opportunities.
What are the major trends in entrepreneurship that you have seen in India in the last decade?
Companies look to the global market. Second, entrepreneurs are flocking to technology including telecommunications, Internet, biotechnology and software. Third, venture capital is easily available. Fourth, entrepreneurs start companies based on their own ideas unlike in the past when most of them got technology from a foreign company, and started joint ventures.
Many times, in the past, these entrepreneurs focused on getting licenses from the government and became just sleeping partners.
What do you think will be 2 to 3 trends in entrepreneurship in the future?
The focus on global markets will increase because the markets are getting more and more inter-linked. Second, the listing of Indian companies on global stock markets will become more pervasive than it is today. Third, Indian companies will become more multi-cultural, will leverage talent from different parts of the world and serve global customers. Fourth, there will be focus on scalability since scale is a necessity to compete with global enterprises.
You were the Ernst & Young World Entrepreneur of the Year winner at Monte Carlo in 2003. How tough was it to compete for an award like this on the global arena?
It is very easy to make pompous statements after I have been very lucky to win. All that I can say is that you should give off your best and pray that God is kind to you. In the end, luck matters a lot. I have been very lucky. I enjoyed participating in every one of the sessions that I was asked to.
We had several, long interviews, debates and panel discussions. They had collected lots of data about us. I am told the jury had long deliberations. Knowing the extraordinary entrepreneurs that competed with me, I am convinced that I was lucky. All the 38 entrepreneurs who had come there were highly accomplished.
Has luck played a major role in your business success too?
Yes, luck plays an important role in business success. For example, we lost out many times even though we had done everything right and we thought our proposal was better than that of our competitors. There were also times when we won even though we were not sure we were the best.
Is there anything special about the Monte Carlo award?
The Monte Carlo award was very special because it was one of the few times when I was winning it for India. Most of the awards that I have won were as an individual. This award was for India. There were flags of the various competing countries including India.
It was an extraordinary feeling to be photographed holding the flag of India when I won the award. So in some sense, this probably was the most precious award because it was an honor for both the country and me.
What is your message to would-be entrepreneurs?
There are lots of ideas that can transform the world, create lots of jobs and wealth. But, becoming successful with these ideas requires tremendous commitment, hard work and sacrifice.
As long as our entrepreneurs are willing to embrace these attributes, they will be successful. Entrepreneurship is perhaps the most powerful tool we have to solve the problem of poverty in India. Hence, entrepreneurs have a very important role in making this country a better place.
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